The Zimbabwean government has implemented a number of measures to stabilise the nation's currency and combat inflation, including the liberalisation of the foreign exchange market and an increase in interest rates. The central bank's monetary policy committee announced that from Wednesday it would begin selling foreign currency at market-determined exchange rates through banks. The move follows the International Monetary Fund’s recommendation that the country remove restrictions on exchange rates. The Zimbabwean dollar had fallen 30% at auction to 3,674 per dollar. The interbank forex market will become the primary source for foreign exchange needs in the economy, with the foreign-exchange auction system continuing to operate for smaller requirements and for price discovery.
Since the beginning of the year, Zimbabwe has introduced a number of measures to stabilise its currency, which has fallen 81% against the dollar. The government is also attempting to rein in inflation, which increased to 86.5% last month, reversing six months of consecutive declines. The rising cost of basic goods and services prompted the government to launch an inquiry into price surges by businesses, with the results of the probe currently unknown.
The central bank has also raised interest rates, already the highest in the world, increasing them from 140% to 150%, following a warning by the finance minister in April that the rates would need to rise to stabilise the Zimbabwean dollar. Tuesday's meeting of the monetary policy committee took place three weeks ahead of the scheduled meeting on 26 June.
Other measures included the scrapping of the 90-day liquidation requirement on export proceeds, a five-fold increase in maximum trading limits to $500,000, and the alignment of trading margins charged by domestic lenders on currency transactions with international best practice.